BofA balking at paying fees for guarantees: report

By IBT Staff Reporter On 07/13/09 AT 3:08 AM

Bank of America Corp is trying to avoid paying billions of dollars in fees to U.S. taxpayers for guarantees against losses at Merrill Lynch, saying the rescue agreement was never signed and the funding never used, Bloomberg reported citing people familiar with the matter.

Regulators contend Bank of America owes at least part of a $4 billion fee it agreed to pay in January -- even without a completed legal document -- because the company benefited from implied U.S. backing on about $118 billion of Merrill Lynch assets, such as mortgage-backed bonds, the news agency said.

However, Bank of America says it owes the Treasury nothing, according to people familiar with the matter, but who declined to be identified because the negotiations are confidential, Bloomberg said.

Bank of America initially received $25 billion from the Treasury and later was forced to seek $20 billion more, plus $188 billion in asset guarantees, so that it could cover Merrill's losses.

The sum demanded from Bank of America is likely to be smaller than the $4 billion described in terms of the agreement, the news agency said, adding that an update on the program's status may come July 17, when Bank of America reports second-quarter results.

Both sides agree the accord was never signed and the funding went untapped, Bloomberg said.

Bank of America and the Treasury did not immediately respond to a Reuters email seeking comment that was sent outside of normal business hours.